#216 VC Seed to Series A, $100m+ ARR, & More
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VC Seed to Series A: The Changing Landscape
Today we’re sharing some quick market thoughts on the VC journey from Seed to Series A financing! Traditionally, VCs expect this transition to occur within 18-24 months. In what was once considered a "normal" year, such as 2018, 25-30% of startups that raised seed funding would successfully secure their Series A within 24 months or less. Today, not so much…
Recent Trends
1.Deal Volume Decline - Based on Founder Shield’s Seed-Stage Funding Statistics, global seed and angel deals have been declining, with 3,850 deals in Q1 2024 compared to 6,276 in Q1 2023, indicating a 38.7% decrease.
2. Longer Seed Stages - Crunchbase data shows that since 2023, companies have been staying longer at seed and raising more seed rounds.
That growth, however, conceals a lack of progression beyond seed funding. As companies take longer to get to Series A, there’s the potential for a much higher failure rate for seed-stage companies, which in turn could wipe out many seed-stage funds in years to come.
3. Valuation Increases - As highlighted in our recent post on Key Takeaways from The State of Venture 2024 report from AngelList, Median pre-seed valuations reached $10 million in 2024, up from $8.3 million in 2023, marking a 20% increase. Seed valuations also grew by 18%, reaching $20 million.
2024 Medians:
Pre-seed: $5-10M
Seed: $20M (+17% YoY)
Series A: $62.5M (+27%)
Series B: $170M (+51%)
Takeaway: Because valuations are sticky in early-stages and jumping in Series A and B, we're seeing a lot more venture studios, incubator programs. Also, we're seeing more targeted micro funds going after inception capital investments (the big VC firms/GPs who are backing these funds are playing along).
Factors Contributing to the Slowdown
This chart from Carta’s Data Minute shows that recent cohorts have underperformed in attempting to get to Series A.
Carta identifies three key factors driving this trend:
Interest rate changes, fundraising slowdowns, and overvaluation: These elements created a challenging environment for seed-stage founders in early 2022.
Higher Series A benchmarks: The metrics for securing Series A funding shifted, leaving many startups struggling to meet elevated requirements.
Increased bridge rounds: While both priced and SAFE bridge rounds have become more common, they offer no guarantee of long-term success. Many startups may temporarily extend operations but are at risk of shutting down.
Looking Ahead!
As highlighted in the 2025 Private Investment Outlook, the venture capital landscape is showing promising signs of recovery:
“After a difficult couple of years in venture capital, 2024 saw the signs of a long-awaited recovery take root. It hasn’t been a fast rebound, and liquidity remains elusive, but looking ahead to 2025, we believe that the VC environment is healthier now than it has been for years.”
Fastest Companies to $100m ARR
Fun fact: Cursor is the fastest-growing SaaS company of all time from $1M to $100M in ARR, hitting the $100M milestone in roughly 12 months at the end of 2024—faster than Wiz (18 months), Deel (20 months), and Ramp (24 months).
Friendly reminder that revenue growth drives the big wins :)
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